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Home Resources Articles How the Government Shutdown Affects SBA Loans and Borrowers

How the Government Shutdown Affects SBA Loans and Borrowers

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How the Government Shutdown Affects SBA Loans and Borrowers

October 3, 2025   /   John Minehart

As of October 1, 2025, the federal government has shut down. For small business owners counting on SBA financing, this may feel unsettling. Loan approvals are on hold, certain systems are unavailable, and many borrowers are left wondering how this pause will affect their plans.

The good news: a shutdown does not mean your financing goals have to stop. While the SBA’s systems are temporarily offline, there are still important steps borrowers can take — and our team is here to help guide you through them.

What’s on Hold — and Why

The key issue is that during the shutdown, the SBA cannot issue new loan authorizations because its systems and staff are not funded to process them.

Here is what that means for borrowers:

  • New SBA Loan Final Approvals:
    Final authorization for 7(a) and 504 loans, including SBA Express, are paused until SBA systems reopen. This is because the SBA’s Capital Access Financial System (CAFS/E-Tran) is offline during the shutdown, which means no new loan numbers can be issued.
  • Loan Increases or Changes:
    Any modification that requires SBA approval, such as increasing your loan amount, reinstating a loan, or extending an approval, will be delayed until after the shutdown. These actions require review and sign-off from SBA staff, and those functions are not operating while the government is closed.

This pause applies specifically to the government’s authorization process. However, It does not mean your application cannot move forward with your bank. We continue working with borrowers to prepare and package files so they are ready the moment SBA systems come back online.

How Capital Bank Keeps Things Moving

Even though the SBA is not issuing approvals right now, we are still hard at work with borrowers.

Here’s why that matters:

  • General SBA Processing: For some banks, an SBA loan application goes through both the bank’s underwriting process and the SBA’s underwriting process before it is approved.
  • Preferred Lender Partner (PLP) Processing: As a PLP lender, Capital Bank is authorized to complete the underwriting ourselves. Once SBA systems reopen, approval can be granted much faster — without going through a second underwriting review process by the SBA.

That means we can keep preparing and packaging your application during the shutdown so it’s ready to move quickly when the SBA comes back online.

What You Can Do Right Now

Even though new SBA approvals are paused, you don’t have to sit idle.

Here are smart steps to take while we wait:

1. Get Your Application Ready
Gather financial statements, tax records, and business plans now. The more complete and polished your file, the faster it can move when SBA systems reopen.

2. Work With a Preferred Lender Partner
Submitting your loan application through a Preferred Lender Partner like Capital Bank means your loan only requires our underwriting, not a second underwriting review by the SBA. This positions your file for much quicker approval once SBA systems are back online, saving you valuable time and helping you access funds faster.

Taking these steps now allows you to stay ahead rather than waiting for the shutdown to end. By preparing thoroughly and working with a PLP lender, you can move to the front of the line when SBA systems reopen — keeping your business plans moving forward without unnecessary delay.

What’s Not Impacted

Even though new SBA loan authorizations are paused, several important areas remain unaffected by the government shutdown:

  • Loans Already Approved: If your SBA loan number was issued before October 1, you can still close and receive funding as scheduled.
  • Servicing of Existing Loans: Routine servicing and support continue. You can reach out to your banker with any questions or assistance needs related to your SBA loan.
  • SBA Disaster Loans: These loans remain active in federally declared disaster areas because they are funded separately from the programs currently on hold. While Capital Bank does not issue disaster loans, we are glad to discuss your needs and help direct you to the right SBA resources.

Our Commitment to You

Whether you are an existing SBA borrower or considering an SBA loan for the first time, we understand that the government shutdown may feel disruptive and uncertain. Our priority is to ensure you have clear guidance and support throughout this period.

  • If you already have an SBA loan: Reach out if you are experiencing financial stress or uncertainty. We’re here to discuss your situation and explore potential options.
  • If you’re preparing to apply: Let us help you gather everything now so your application is ready to go the moment SBA systems reopen.

No matter where you are in the process, our bankers remain fully available to answer your questions, provide advice, and keep you informed. The shutdown is temporary, but your business goals are long-term — and we are committed to helping you stay on track.

Need assistance?  Contact your Relationship Manager today or learn more about Capital Bank’s SBA lending options here.

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